Grants loan personal uk

The Dearing report tackles a bastion of middle-class privilege. But it stops short of spelling out the real priorities for post-school education

English higher education (and I mean English, not Scottish) has rested on four assumptions. First, that only a small minority can benefit and, therefore, universities should be elitist. Second, that this minority should receive an expensive, high-class education. Third, that the vehicle for this education should be a concentrated period of full-time residential study between the ages of 18 and 21 a rite of passage almost. Fourth, that all this should be provided free, at public expense.

These assumptions survived almost intact until the mid-1980s - a marvellous testament (rather like the survival of the elementary schools into the 1950s) to the stubborn English belief that most of the population is stupid and ineducable. At that time, vice-chancellors, politicians and bureaucrats racked their brains over how to cope with a sharp decline in the population of 18 year olds. Only a few lonely voices suggested this was the greatest postwar opportunity to increase the proportion of young people going to university. As late as 1985, a green paper forecast a maximum of 500,000 students in 1996-97. The figure has turned out to be more than a million - equivalent to one in three of the relevant age-group. A target of 45 per cent participation within 20 years is now regarded as perfectly reasonable.

One by one, the other assumptions have collapsed. The amount spent from public funds on each student has fallen by more than 40 per cent since 1976. (Vice-chancellors, led by the ample voice of Lord Annan, used to convene education correspondents monthly to explain how even a 1 per cent fall would be a surrender to barbarism.) Most university classes (tutorials and seminars) are now somewhat larger than sixth-form classes were in the 1970s. Mature students (over-21 on entry) are now in a majority, though most are part-time; growing numbers study at their local university, living in the parental home.

This week sees the fall of the last and sturdiest pillar of the old university system. The English middle-classes may not like paying taxes that benefit other people, but they never readily give up anything they get for free. The late Sir Keith Joseph was politically ruined when, in 1985, he proposed parental contributions to fees, Tory constituency associations still then being vigorous enough to frighten the parliamentary horses. Before the last election, penurious universities warned that, if no more public money was forthcoming, some of them would charge fees to students on their own initiative. Fearful of incurring middle-class anger, ministers called up Sir Ron Dearing, told him to produce a very big report and on no account to deliver it before the election. Labour readily concurred.

Dearing has duly delivered, with ten weighty volumes. These include a good deal of banal rambling about the Internet, changes in family life and shifts in the labour market. ("Social and cultural changes over the last thirty years have been profound," we are helpfully informed.) But the deed is done. Dearing proposes that students should contribute, through tuition fees, 25 per cent (probably about [pounds]1,000 a year) of the cost of their degrees. This was what he was expected, indeed more or less instructed, to do. But oddly - or perhaps not so oddly, Sir Ron being a civil servant - the report cops out of the big question. How exactly can enough money be found to allow the growth in student numbers to continue while also rescuing the universities from a chronic funding crisis that has left them with a huge repairs backlog and a shortage of up-to-date books and equipment? The report, having accepted that students should pay fees, perversely opts to keep the present non-repayable maintenance grant. It sets out alternatives that would release the necessary money but then concludes, rather feebly, that a decision on their acceptability "is essentially a political one".

So in the end ministers, instead of hiding behind Dearing, have been forced to grasp a few nettles. The details of their solution are complex but less important than the principles. Students from well-off homes will get nothing from the public purse (except the 75 per cent of the cost of courses that is still not subject to fees) either their parents pay or they pay, through taking out a loan, repayable after graduation. Students from poorer homes (roughly a parental income of less than [pounds]216,000 a year) will not pay fees at all, but will need loans for living costs. Graduates will be required to make loan repayments only when they are earning above a certain level.

Charging fees to students represents more than a departure for the higher education system. It is also another blow, along with the erosion of mortgage interest tax relief, to the middle-class welfare state. And just as the decline of Miras still has some way to go, so no doubt does the change in public subsidy to the costs of higher education.

The extent to which universities are the preserve of the better-off social groups is still remarkable. About 80 per cent of children from social class I homes (professionals) go to university, which is probably getting pretty close to saturation point. For working-class children, the rate is still less than 20 per cent and, for social class V (unskilled workers) barely 10 per cent. Providing tuition free of charge therefore has always been a subsidy from working-class taxpayers to middle-class children. Even after Dearing it will remain substantial: as well as most tuition costs still being met from the Exchequer, all loans will incur interest well below commercial rates. The subsidy is usually defended as a means of helping underprivileged young people who might not otherwise go to university. But it is an extraordinarily inefficient subsidy, rather akin to providing grand opera free-of-charge, with cheap interval drinks, so that they can be inspired to sing Wagner in the Gorbals. If the working-classes fail to get to university, it is not because they are put off by the costs but because their schooling fails to provide them with the necessary motivation or qualifications. Far better, then, if we are serious about this, to transfer the money to improvements in the school system and, perhaps, to better grants for 16 to 18 year olds.

Will the new charging regime deter significant numbers from entering higher education? The answers are more complex, but also less important, than generally supposed. Across a working lifetime, graduate men get an estimated 24 per cent higher pay and graduate women even more - than similarly qualified peers who didn't enter higher education. Strip out the effects of class background and innate ability, however, and the premium comes down to 14-18 per cent. Add the earnings foregone during the period of education and it is reduced further to 11-14 per cent.

That still looks a better and safer investment than anything else around. But the "rate of return", as economists call it, will be further depressed by the increased stock of graduates and by the introduction of fees and repayable loans. There is some evidence, too, of a growing dispersion in the benefits of degrees: the rates of return seem to be high for Oxbridge and the traditional Redbricks and will probably remain so; for some of the former polytechnics, they may in some cases be negative.

But all this can surely be left to individual judgment - the market, if you prefer. If the newer universities don't provide the skills and employment opportunities that young people want (or, put another way, the graduates that employers will pay for) they will either go out of business or find ways of improving. Higher education is not, after all, generally an unpleasant experience, recent suicides at Oxford notwithstanding. It may be important for future national prosperity, but it is also a social good, and many young people will continue to choose it because it is enjoyable or stimulating or because their friends are going to university, too. Others may spend the equivalent years going round the world or undergoing religious conversions or campaigning against new airport runways, but nobody will ask about rates of return for them.